Opening of a Health Spa Luxury Hotel in Greece - Essay Example

INTRODUCTION: The aim of the paper is to assess the investment possibilities for the opening of a health spa luxury hotel in the country of Greece. The paper will explore all areas governing the requisites for the successful setup and operation of the health spa luxury hotel. It will investigate and arrive at a consensus by careful collection of data and production of statistics in order to prove the matter produced. As per the requirements of the paper the investigation will take place from the point of view of a consultant in the hospitality sector. To ensure a wholesome and comprehensive report on the investment possibility for a health spa luxury hotel in Greece, the paper will contain geographical, demographical , economic and political status of the country. It will further discuss the current business environment and the support the industry enjoys from the government. A market analysis which includes the current market potential, the opportunities and challenges for the new business is also a vital part of this investigation. A study of the business environment is incomplete without the knowledge of the country or the geography in which the business is going to operate or function. BODY Greece - Geography Greece a country that lies in the Southeast part of Europe is officially known as the 'Hellenic Republic' It is surrounded by Albania, Bulgaria, Turkey to the east and the former Yugoslav republic to the north. The city of Athens is the Capital of Greece. Having the Aegean and Ionian Seas to either side the seas feature a vast number of islands on the Eastern Mediterranean Basin. This scenic beach and comfortable geography of Greece makes it a natural location for tourists. Therefore provides perennial business to the hospitality industry. Greece - History Greece inherits the civilizations of ancient Greece, the Roman and the Byzantine empires and four centuries of Ottoman rule. This rich heritage has left its mark on the culture of Greece, which is considered to be the birthplace of democracy, philosophies, mathematic and scientific principles, including the western drama of tragedy and comedy. Greece is a fully developed country today, a member of the European Union since 1981, a member of the European Economic and Monetary Union since 2001 and an official member of several world organizations. Greece Cities and Topography Thessaloniki, Patra, Heraklio, Volos, Ionnania and Larissa are some of the major cities in Greece apart from Athens the Capital city. Athens, Crete the South of the Aegan Sea and the Ionian Islands are some of the primary tourist destinations. Beach resort visitations are widespread among the other coastal areas of Crete, Corfu, Rhodes and Chalikidiki as they are developed and more accessible and attract large number of annual tourists. The hospitality industry and the health spa and luxury hotels are heavily dependent on the tourism to that country and Greece has been voted as the second best tourist destination in Europe in "The Telegraph" early this January. Greece - Business Environment- Tourism Looking at the tourism industry in Greece, The travel and tourism contribution to the Gross Domestic product of Greece is expected to rise from 37.3 billion in 2008 to 69.6 billion by the year 2018. The travel and Tourist economy contributes 963, 000 jobs, which 20.9% of the total employment in 2008 and is expected to rise to 1,349,000 by 2018.The Injection of 40 million into the industry by the tourism ministry of Greece is bearing fruit. Moreover, the progressive economy of Greece proves to be of high attraction for investment possibility. Below is a table that proves the uptrend in the economy which makes Greece a land of business opportunity. Year Real GDP growth rate (%) Unemployment rate (%) 2005 3.7 9.8 2006 4.3 9.3 2007 4.1 8.3 2008 4 7.4 Source: The Greek state budget for 2008 The growth in the GDP rates couples with the reduction in the Unemployment rates is the key to the successful functioning of any economy. Looking at tourism after the Olympic games in 2004 Greece has a 10% increase in the arrival of tourists every following year all the records evidence a 17 million inflow of tourists in 2007. This industry alone accounts for 18.5% in the GDP, besides fuelling other sectors like construction agriculture and commerce. A recent interview of the Tourism Minister of Greece Mr. Aris Spiliotopoulos in the Neo Magazine stated "The new broader strategic positioning of our country demands that we portray Greece as a destination of diversity and contradiction, a place where every visitor can live a true experience. Consequently, Greece can be considered a venue for experiences, where true, unique stories take place. That is our strategy for the new image of Greece, as a destination of global appeal. Nautical tourism, Culture tourism, Country Side tourism, Touring tourism, Health and Wellness tourism, MICE (Meetings, Incentives, Conferences, Events) tourism, Luxury tourism, City Breaks, Seaside tourism."(Rhompotis, 2008.) This statement of his speaks volumes in favour of the proposed health and luxury hotel. In terms of encouragement for private investment the minister states "New convention centers, spas, luxury hotels, golf courses, modern marinas etc will enhance the quality of Greece as a destination. New public infrastructures, modern five star hotels, thorough renovation of museums, represent a steering power for Greece, which is competitive to all the advanced European destinations. We step up PPPs projects (Public Private Partnership). We encourage private investments and we solve all related bureaucratic problems and cross-ministerial issues. We expect a great expansion of hotel capacity - which will facilitate our effort in order to attract a bigger share of the upper market tourism and at the same time we strongly encourage the preservation of our unique environmental heritage and cultural identity." (Rhompotis, 2008.) Business Environment - Hotels and Spa's The hotel industry in Greece is quite a competitive one as business opportunity for the set up of hotels and spas are highly attractive. Some of the most popular luxury hotels in Athens, Thessaloniki and Crete hotels are, The King George Palace - Athens, Grande Bretagne - Athens, Athenaeum Intercontinental- Athens, Blue Palace Resort and Spa - Crete, Elounda beach and Gulf Villas and Resorts - Crete, Dainai Beach Resorts and Villas - Chalkidiki .The hotel distribution throughout Greece is represented in the Pie Chart below. Source: Tourism and Resort Infrastructure, Hellenic Tourist Properties The above pie chart is an indicator vital for the set up of a hotel business. The chart not only educates us on distribution, but the tourist visitations in every sector. The underlying logic is: Locations that are densely populated with hotels in places like Crete and the Central Macedonia have large number of tourist visitations, greater accessibility and infrastructure, special attractions and also scenic beauty or heritage locations. The most important of all for any business to keep watch on - 'Competition.' Health Spa The idea of health spa in Greece is one that is welcome as the concept of health tourism is prevalent among many tourists who visit from the UK, US and the rest of Europe. The recent journal published by JBR Hellas gives us more information on the concept of health tourism. "Health Tourism is a relatively new concept in Greece, which is being promoted by the National Greek Tourism Organization (GNTO), within the context of differentiation of the tourism product and the prolongation of the tourist season. The concept of Health tourism is known but in reality, barely existent in Greece. In our country health tourism is associated with mineral spring tourism and visits of elderly people to various mineral springs for curative purposes annually. However the situation is much different abroad and is just beginning to change in Greece. A Health tourist can be someone who travels to a spa with an aim to relax and unwind or someone who travels in search of alternative therapies, plastic surgery or diagnosis. The good news for the tourism industry is that a new market is emerging, a market of wealthy people who wish to combine their holidays with maintaining a good health, staying in shape and keeping a low stress level."(Ikkos 2005). This clearly is an opportunity to open a health spa and luxury hotel in Greece. Challenges: Though the prospect of an investment in the hospitality or the hotel industry is bright in Greece with all possible support from the government of Greece, there are a few ground realities which have to be inspected and evaluated before venturing into the business. There are four key challenges which are listed below: Global Uncertainty: The current credit crunch in the US and the UK has hit many industries and countries. The shrinking disposable income has left many households to give up on holiday expenditure and tourism or look out for budgeted tourism. This slows down tourists visitations to the country and in turn hit the hospitality industry. Financial Viability: With heavy investment into the industry investors would be expecting a strong recovery and the covering of costs as soon as possible hence a business plan at this point in time of global turmoil must be an effective and profitable one. Safety and Security: The safety and security of tourists should be ensured as no place is a safe haven as far as terrorists are concerned. Airlines in the 21st century: The International Society of Hospitality Consultants stated: "It is important to closely monitor the fundamental changes occurring in the airline industry and their potential impact on the hotel industry for the viability of the hotel industry depends greatly on airline lift capacity, service and convenience in travel as well as the cost of airline travel."The airline industry costs and network is vital to the hospitality. The government of Greece has to work towards a cost effective and sound network of airlines that will touch Greece. CONCLUSION Investment in a Health spa luxury hotel in Greece is definitely a profitable venture as the geographical, economic, political and business environments in Greece are favourable and prove to be productive. However it is of utmost importance to analyze key financial positions, initial investment, area and scale of operations, pricing and branding positions, in order to sustain initial recovery period till the point of break even. References: Papadimitriou, Pavlos. & Trakas, Themis. 26 December 2008. The changing face of the Greek hospitality market. [Online] 4Hoteliers. Available: htttp://www.4hoteliers.com/4hots_fshw.phpmwi=3649 Date accessed 12th February 2009. Rhompotis, Demetrios January 2008. Greece: A place where every visitor can live a true experience . Neo Magazine. Available: http://www.neomagazine.com/2008_01_january/2008_01_14_minister.html Date Accessed 11th February 2009. Coccossis, Harry. 2005. Tourism Hotel and resort infrastructure. Hellenic tourist properties. Pg 32. Available: http://video.minpress.gr/wwwminpress/aboutbrandgreece/aboutbrandgreece_cocossis.pdf Date Accessed 12th February 2009. 2008. The progress of the Greek economy in key numbers. Presentation of the Greek state budget for 2008 Available: http://www.mnec.gr/export/sites/mnec/en/economics/2008_Budget_at_a_glance/2008Budget_eng.pdf Date Accessed 10th February 2009. Dr. Ikkos, Aris. November 2002. Health Tourism: A new challenge in tourism. JBR Hellas. Pg 1. Available http://www.gbrconsulting.gr/articles/Health%20Tourism%20-%20a%20new%20challenge.pdf Date Accessed 15th February 2009. Read More